Now, here’s a report on a new audit of New Jersey’s S-CHIP program, called FamilyCare, that highlights how wealthy families are getting onto the rolls and staying there–because no one’s checking their eligibility:

People earning as much as $295,000 are enrolled in a state health care program designed for New Jersey’s poor, according to a new audit that found the state failing to check eligibility for all program enrollees.

NJ FamilyCare is meant to help working poor parents and children.

But the state auditor found vendors aren’t performing eligibility checks and the state isn’t checking applications for unreported income.

The state also failed to try to collect $4.6 million owed to the program by 16,300 people who were disenrolled, the audit found.

The findings come with the state struggling to pay for health care for the poor and uninsured.

The problems, the audit found, has allowed at least three people with self-employment incomes of $295,000, $186,000 and $177,700 to enroll in the program.

The program is supposed to serve, for example, parents in a family of four making up to about $28,000 per year.

The state is spending $535 million per year on NJ FamilyCare, which provides services such as immunizations, hospitalization, lab tests, X-rays, prescription drugs and dental and mental health services.

About 122,500 children and 89,000 adults are enrolled. Depending on income, some pay no copayments, while others pay fees much cheaper than private insurance.

The audit found:

— About 13,000 participants weren’t sent renewal applications as of September, though regulations require eligibility be determined annually. The audit found $43.1 million was paid to these participants from July 2005 to September without knowing if they remain eligible.

— Some beneficiaries failed to report all income on FamilyCare applications, including income earned through self-employment, rentals, interest and dividends. Applicants authorize the program to match applications with their tax return, but the state isn’t checking all tax files.

— Auditors found nearly 7,000 cases where the applicant reported $10,000 or more in self-employment income on their 2006 tax return, including those who failed to report self-employment incomes of $295,000, $186,000 and $177,700 on their NJ FamilyCare applications.

Your takeaway quote is in bold at the end of this section in the AP’s write-up:

The state failed to try to collect $4.6 million owed to NJ FamilyCare by 16,300 people.

, The state paid $2.1 million from July 2005 to December for medical equipment that should have been paid for by nursing facilities.

, The state is failing to monitor medical equipment providers. For example, it found a provider billed the Medicaid program $30,000 for 48,000 adult incontinence briefs, though the audit found only 10,000 briefs were purchased. Auditors said they’ve referred this and other examples to state criminal investigators.

, The state isn’t properly calculating Medicaid reimbursements. For instance, auditors found the state paid $8,181 for a wheelchair that should have cost $5,705.

, The state spent $6.7 million in state and federal money more than was needed to rent oxygen equipment and buy adult incontinence briefs.

, The state, from July 2005 to December, sent as many as three blood pressure monitors to Medicaid patients, even though many come with warranties and are replaced for free by drug store chains. The audit found the state could have saved $100,000 by denying these claims.